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How does Mercado Pago work? Here is a guide for beginners, entrepreneurs and ecommerce users

If you want to start in the world of online payments, you need to know how Mercado Pago, the largest FinTech in Latin America, works to facilitate transactions in e-commerce and physical points of sale.

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This article was translated from our Spanish edition using AI technologies. Errors may exist due to this process. Opinions expressed by Entrepreneur contributors are their own.

Sometimes it seems that every day a new FinTech appears that promises to be the best to handle your online transactions . However, there is one that stands out not only for being practically ubiquitous, but also for being the one that has been established for the longest time in Latin America: Mercado Pago .

Cortesía Mercado Pago

“Mercado Pago was born more than 20 years ago in Argentina, as the gateway to process all payments in the Mercado Libre marketplace. Today we are the largest FinTech in Latin America and we are focused on the democratization of money, ” said Rossana Escalante, online payments manager at Mercado Pago México, in an interview with Entrepreneur en Español .

The executive indicated that the platform has more than one million active users per month . "We are talking about more than 25 thousand sellers who have trusted us, mostly SMEs and independent sellers," he says.

Rossana says that many businesses have succeeded in embracing digitization, especially in the past year as a result of the pandemic. The crisis helped business owners understand "the importance of having a digital presence and adding value to their buyers."

If you are an ecommerce entrepreneur , fan of online shopping or a simple beginner entering the world of online payments , here is a basic guide to start using Mercado Pago.

1. How to open a Mercado Pago account?

Few people locate how easy it is to open an account in Mercado Pago , in fact, there are those who are not even aware that they already have one.

“Today, all the people who have made a purchase in Mercado Libre already have an account within Mercado Pago , they already have a username and password. The fact of having made a purchase in Mercado Libre already makes it part of our client portfolio ”, explained Escalante.

2. What benefits do I have if I collect with Mercado Pago?

Citing a recent study by the company, Rossana said that offering card payment can increase the average sales ticket . In addition, he indicated that "the vendors who began to transact with Mercado Pago managed to increase their sales volume by up to 30% , while the handling of cash was reduced by 16% ."

Other advantages for sellers are "being able to offer their payers various alternatives and having access to metrics to better understand their customers ," says the executive. Expanding the collection options allows them to offer a solution to potential customers "who may not be encouraged to buy from you because they do not bring cash."

  • 4 million people made, for the first time, online payments through Mercado Pago in the first year of the pandemic.
  • More than 14 thousand SMEs used the payment link.
  • 7 thousand sellers in Mexico offered their products through web pages and charged with the Mercado Pago payment processor.

Data via Mercado Pago

"In addition, when paying with Mercado Pago, the probability that this transaction will be approved, even by the banks themselves, rises significantly," he added.

3. Yes, Mercado Pago gives you access to credits

By using Mercado Pago , entrepreneurs can request credits based on their income in real time , and not on their history. "What we are offering is a window to financing, which before this type of vendor normally did not have," Escalante said, and then explained the process .

“First, the seller starts with Mercado Pago in any of its modalities (online store, physical terminal at the point of sale or by QR code). As of its second full month of operation, our AI models give it a rating and begin to offer it lines of credit, ”he explained.

The reason for granting a loan so easily is "because we already know how much you sell, and it does not matter if the bank rejected you, if you are in the credit bureau or if you have other debts, we are aware of your income and from that we work to support you" .

  • We have financed more than 100,000 SMEs with an average amount of 125,000 pesos.
  • In the first months of the pandemic, Mercado Crédito gave loans to more than 50,000 SMEs that did not have access to credit in the traditional system.
  • Of these, 51% use their loan to buy inventory, while 46% focus it on working capital.

Data via Mercado Pago

The company is clear that "financing is key for the growth of SMEs" , and that is why they offer that "just by starting to transact with us it already gives you a history, a benchmark to receive Mercado Pago credits " , Rossana stressed.

The line of credit to which a seller has access is updated every month, as their income fluctuates. "Maybe at the beginning the line of credit will be very small, but as your business grows, it will expand and other financing options will open up," he said.

Those who pay through Mercado Pago, the buyers, also have access to various financing options with and without interest, depending on the seller.

  • We currently have more than 8 million pre-approved consumer credit lines.
  • More than 50 thousand daily purchases were made within Mercado Libre through the financing granted.

Data via Mercado Pago

4. Security is key in Mercado Pago

“That is the most interesting thing about Mercado Pago. Once the buyer registers a card in their Mercado Pago account, the information on that card will only be used by us with encryption models, which require many 'keys' to access it ” , explains the executive.

"We safeguard the data, and when you are making purchases on other sites that offer the Mercado Pago option, you will no longer have to give your banking information to each online store every time you want to pay," he added.

Rossana explained that the platform has put more and more security locks , the most recent based on Artificial Intelligence (AI) . All of this serves "to ensure that there is always a real person behind each computer and each purchase," and thus reduce fraud against sellers and buyers.

“On the security side, we, as a public and regulated company, which has a presence throughout Latin America, have countless controls to guarantee the safety of our users. We comply with all the highest security standards in how we handle our clients' banking information, ” said Escalante.

5. The alliance between Mercado Pago and Shopify México is a win-win for everyone

"In the ecommerce ecosystem, whenever we think about the great journey it is to start selling online , there are many factors to fit all the pieces of the puzzle," says the executive.

“Shopify, in the end, is today the leading ecommerce platform in Mexico, because it gives sellers the possibility of setting up an online store of the highest quality, with minimal effort, without the need for technical knowledge, with all the functionalities and integrations necessary to be able to carry out small, large and giant projects ” , he deepened.

“We are a Shopify partner in the part of the payment gateway. They enable the platform where you are going to set up your virtual store, which implies making remote electronic transactions, and this is done through the alliance that we have had for some years in the region ” , concluded Rossana Escalante.

In fact, Mercado Pago will participate this October 28 and 29 in INSIGNIA , a free online event organized by Shopify Mexico , which brings together 28 e-commerce experts with the vision of offering the necessary tools to create a successful business. If you want to know more about the world of e-commerce and the advantages of electronic payments , just register here and connect to the event.